Should You Buy Entravision Communications Corporation (NYSE:EVC) For Its Dividend?
A large part of investment returns can be generated by dividend-paying stock given their role in compounding returns over time. Entravision Communications Corporation (NYSE:EVC) has returned to shareholders over the past 5 years, an average dividend yield of 3.00% annually. Let’s dig deeper into whether Entravision Communications should have a place in your portfolio.
Check out our latest analysis for Entravision Communications
5 questions I ask before picking a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
Is its annual yield among the top 25% of dividend-paying companies?
Has it paid dividend every year without dramatically reducing payout in the past?
Has dividend per share risen in the past couple of years?
Is is able to pay the current rate of dividends from its earnings?
Will the company be able to keep paying dividend based on the future earnings growth?
How does Entravision Communications fare?
The current trailing twelve-month payout ratio for the stock is 10.52%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a higher payout ratio of 36.75%, leading to a dividend yield of 3.85%. However, EPS is forecasted to fall to $0.14 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.
If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Unfortunately, it is really too early to view Entravision Communications as a dividend investment. It has only been consistently paying dividends for 5 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
Compared to its peers, Entravision Communications generates a yield of 3.85%, which is high for Media stocks but still below the market’s top dividend payers.
Next Steps:
If Entravision Communications is in your portfolio for cash-generating reasons, there may be better alternatives out there. However, if you are not strictly just a dividend investor, the stock could still offer some interesting investment opportunities. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. I’ve put together three essential factors you should further research:
Future Outlook: What are well-informed industry analysts predicting for EVC’s future growth? Take a look at our free research report of analyst consensus for EVC’s outlook.
Valuation: What is EVC worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether EVC is currently mispriced by the market.
Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
